I used to edit Innovation Management. My book, "The Elastic Enterprise", co-authored with Nick Vitalari and described as a must read for companies that want to succeed in the new era of business - looks at how stellar companies have gone beyond innovation to a new form of wealth creation. I speak on new innovation paradigms.
I started my writing career in broadcasting and then got involved in the EU's attempt to create an ARPA-type unit, where I managed downstream satellite application pilots, at just the time commercial satellite services entered the market. I also wrote policy, pre the Web, on broadband applications, 3G (before it was invented), and Wired Cities.
I have written for many major outlets like the Wall St Journal, Times, HBR, and GigaOm, as well as producing TV for the BBC, Channel 4 and RTE. I am a research fellow at the Center For Digital Transformation at UC Irvine, where I am also an advisory board member, advisory board member at Crowdsourcing.org and Fellow of the Society for New Communications Research.
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Apple at $270?

How much of a self-fulfilling prophecy can the decline of Apple‘s stock price become? From $700 to the mid $400s, Apple is clearly losing ground even as analysts continue to support the stock – the majority of analysts tracked by Yahoo Finance retain buy recommendations with a mean target price above $600. Expert investment opinion is not the problem.

Something else is going on, akin to a run on the stock. The world of social media is inflicting this damage.

Investors who bought the stock on the way up will be chasing the next hot stock. The company needs to make itself appealing to a new crop of people who’ve never considered the stock, analysts say, by doing what Wall Street wants and doling out more of its massive cash pile in the form of more generous dividends and stock buybacks.

That, of course, could be disastrous for Apple in the long term, as it would involve significant culture change and focus away from the customer, who would see the company dividing its loyalties. This though is also not quite the point. Apple’s stock price decline is a story foretold. Already a year ago people were complaining online about the stall in innovation at Apple – whether justifiably or not.

I contrasted Eric Jackson’s view (Apple to go to $1650) with Edward A. Zabitsky’s,quoted in the Sunday Telegraph (Apple to drop to $270). Zabitsky’s was one of the first times in the iPhone/iPad era that we’ve seen serious reservations expressed about Apple’s business. The process of negative reporting is picking up momentum….

Business Insider yesterday quoted NYU finance professor Aswath Damodaran as having dumped all of his Apple stock. Damodaran said as much in a Bloomberg interview. “I sold because I’m very uncomfortable with the other people who are holding Apple shares right now. The new investors of Apple scare me. They’re momentum investors. They’ve shifted the game. Once stocks become a momentum play, intrinsic value goes out the window.”

Here on Forbes, Todd Ganos speculates: “We warned about Apple a couple weeks ago. The question is: will what happened to gold also happen to Apple? If yes, it would mean a return to $400 per share.” While Nigam Arora had this to say: “The real reason for the swoon is that the stock is over-owned, sentiment is too bullish, and there are jitters over upcoming earnings.” Meanwhile, the Boston Globe reports, it was analyst Walter Piecyk, moving from buy to hold that broke Apple’s run. Piecyk worried about carriers ending their subsidies of iPhones. And here about the risk to Apple’s business model.

Although there has been a lot of focus on Apple’s mis-steps on technology like Maps and Siri, I think it’s biggest problem is its reputation management. Though some readers have accused me on being anti-Apple I have tried to be pro-understanding and my biggest concern is the impact of social media on reputation.

The rise of “write what they read”. Over the lifespan of the iPhone the information layer has changed. No longer does it have the appearance of objectivity in the way a CNET tried to create for the WINTEL era. A new information dynamic is taking hold. Increasingly writers will write what they see people read about. Every writer needs an audience and it is useless to write on topics that have low appeal. That is a big booster for a company like Apple. Or it was. But now Apple is a magnet for writers with a wider variety of opinions, negative as well as positive.

I wonder then whether purveyors of opinion in the new information market will drive Apple down further, perhaps as low as Zabitsky’s $270 for no better reason than it is out there?

This is a serious development in how information is originated and conveyed. In the old days of the press we had press commissions, people’s editor, a long established objectivity ethos, and other ways to contain opinion within some kind of bounds. This is a different world, yet Apple has been reluctant to step up as a social media participant. I wonder if its shareholders are now paying the price for that or whether there is time for Tim Cook to change.

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How dumb is it? Let me see. They release the new iPhone in more places over the first weekend each year, then claim they have set a new record over that period. In the mean time their super fans are too busy to see what is actually taking place. The iPhone 5 was available in more countries in Apple’s first quarter this year than the iPhone 4s was last year in the same quarter. Until an adjustment is made for that then all talk of record growth is somewhat shady. If anything, the current numbers include sales that would have gone to a later quarter had they kept the release schedule of the iphone 4s with respect to countries. So I suspect that the decline in sales for the next quarter will not simply be as a result of it not being the holiday quarter.

$AAPL at $270 equates to a P/E of 6-ish, presuming Apple doesn’t net another penny.

Here’s the problem with all of the reoccurring stories about what the competition is doing, these stories never focus on why said products are _good_ on their own merit. Instead, these stories always focus on the speculated Henny-Penny outcome for Apple. Let’s look back a bit.

Remember how WebOS-based smartphones and tablets were going to eat Apple’s lunch? How did HP do with that golden goose they acquired, after Palm capsized? That was the one operating system I thought had the best chance to challenge iOS, yet it was ineffectual.

Remember when RIM’s shift in focus to touchscreens, etc, would spell doom for Apple? Surely Blackberry 10’s going to…well, we’ll have to wait and see, but I like Apple’s chances.

Same goes for initiatives from Google/Nexus, Nokia, Microsoft, et al: at one point or another throughout Apple’s history someone was going to put an end to their success, or lack thereof.

Turns out Samsung isn’t kicking the stuffing out of Apple the way the tech and financial journalists would have the casual reader believe. While Android, collectively, and Samsung are selling more units, Samsung’s Galaxy series hasn’t stalled iPhone sales.

In fact, Google’s Android nor Samsung have managed to reverse Apple’s sales trajectory. In the face of all this competition, Apple has continued to do what Apple does: Iterate, execute operationally, sell product and address missteps.

Scoreboard: Apple gained market share in the US last quarter, increasing from 45% to 51% of the handset market. Apple tripled iPhone sales in China. 3x, which was stronger than the projected growth for the entire smartphone market as a whole.

There are reasons for this, I believe, and they have a lot to do with the current state of the Android customer experience. Forget the ecosystem, as it’s only a small – albeit critically important – part of customer experience. This is something Apple has understood and has painstakingly cultivated for decades. It’s among Apple’s most crucial competitive advantages. Dip into their customer satisfaction stats to see how well Apple’s performing here. It’s impressive.

Apple has never been the company that relied on radical innovation may pundits would have people believe. Apple doesn’t do radical transformation in short periods of time. Again, study the product timeline. It’s all there. As such, Apple’s success isn’t as fragile as these headlines suggest. Apple’s not invincible. The company will continue to make mistakes. Apple will always face competitive threats: that’s business. I’m also not saying that Apple doesn’t face internal issues. These exist, these are real.

But I like Apple’s chances here as they stack up against Samsung, against whatever Google’s Motorola initiatives hold in store.

WOW, what a hit piece. The title has almost nothing to do with the article. The author just refers to a bunch of bloggers who are mostly idiots. /s Then the conclusion is ….. well….. I am not sure what the conclusion is.

Should Apple give all its money away, should it keep it, should it just leave this planet and go home to its home planet????? lol

“the stock price is being talked down daily and Apple looks incapable of responding. Not worth thinking about?”

It is absolutely worth thinking about. But look at $AAPL’s chart: it’s rife with counterintuitive corrections, some far more “devastating” than the most recent correction.

It has never really been “easy” being an Apple user, and the same has mostly true as an investor. Someone’s always been at the ready to rain on Apple’s parade. It’s for that reason I’m not expecting blood from the turnip: i.e. Apple’s relationship with Wall Street.

Looking back at Apple’s history provides a very clear answer to why Apple’s has not been actively shooting down the barrage of BS: It’s because Apple has never been one to kowtow to Wall Street. Never. Apple executives have always maintained that the products and the financial results should speak for themselves.

Problem is, not everyone seems to be listening to that reality. That, and there’s simply too much for certain sensational contrarians to gain by calling out one of the most successful companies in history.

Although what the pundits say can certainly hurt Apple’s shareholder value, as long as Apple continues to sell good products in quantity to consumers, backed by good customer service, there’s no reason Apple will lose money or go out of business. Hedge funds are running the stock market and that can be easily seen by how fast stocks are dumped or bought. It seems to just happen in minutes and must likely be done by fast programs that dump or buy millions of shares instantly. There’s nothing that can be done about that, but any company can be attacked that way. Hedge funds are not loyal, they probably have little concern about long-term prospects and they likely ignore standardized fundamentals. The hedge funds buy what is hot and dump what is cold. It’s just a quick way to make money.

As long as a company has a large and loyal consumer base and plenty of cash to ride out the hedge funds’ fickleness, it will survive. So, Apple has gone down in Wall Street’s eyes over the last six months. I’m sure Apple can turn it around as long as they continue to sell products at decent margins. Consumers are not Wall Street investors and they can’t afford to dump products at a moment’s notice. Most consumers are likely not reading all the negative press about Apple, either.